Government Shutdown - How is it Affecting Contracting?

Marc Vogtman / Oct 2, 2013

If you're like me, your Facebook and Twitter feeds are overflowing with opinions about the government shutdown and what it means for federal government employees. While we don't want to tread too far in to that particular minefield, I will say that we here at GovTribe have family, friends, and colleagues who work for the government. Some have been furloughed and others, for the time-being, have not. But not knowing when or for how long you'll be getting a paycheck is tough and stressful. Our thoughts and best wishes are with them in this time of uncertainty.

What I really want to briefly comment on, though, is what a shutdown looks like for government contracting. The government contract service provider population is roughly three times the size of the civilian government employee population. A restriction or cecessation of government spending activity affects this crowd as well. And we're seeing some pretty major slowdowns in activity. This graph is generated using the same data that powers our iPhone app, hōrd

This graph shows three metrics of government contracting activity from last Monday (9/23) through the first two days of the shutdown (10/1 - 10/2). The number of obligation transactions - the way the government allocates funds to specific active contracts - dropped by 50% on day one of the new fiscal year. Actual spending on active contracts (Dollars Obligated) dropped by 76%. And the solicitation activity - government postings of upcoming contract opportunities that indicate intent to award future contracts - dropped 38%.

Some of this can be explained by a surge of obligation and solicitation activity right at the end of FY13 to use up already budgeted funds. However, activity drop-offs at the beginning of previous fiscal years were closer to 20% - nothing like what we're seeing today.

It's difficult to draw conclusions from this information. Nobody yet knows what the FY14 budget will look like. It's possible all the expected spending will just be delayed. But in the meantime, thousands of contractors have been ordered to stop work on active contracts. Those lucky enough not to be forced to use vacation days or take leave without pay are turning their attentions to business development work that assumes a FY14 budget that may not exist for the foreseeable future.

So our thoughts are with the contract workforce today, as well. GovTribe knows your pain, even if Twitter doesn't.